Engineers at the University of Toronto have won a prize that has been unclaimed for 33 years by building the world's first helicopter powered only by human muscle.

The Igor I Sikorsky Human Powered Helicopter Competition was launched in 1980 by the American Helicopter Society (AHS). The rules stated that the $250,000 prize could only be won by a human-powered machine capable of hovering for at least 60 seconds, reach at least 3 metres in height, and stay within an area 10 metres by 10 metres.

On Thursday, the award was handed over to the AeroVelo project, led by Todd Reichert and Cameron Robertson. Their winning flying machine, called Atlas, has a set of 20-metre rotors at each corner of a square frame 50 metres on each side, and is powered by a bicycle at the centre of the square.

"This isn't something that you're going to commute to work in any time soon, but it's an exercise in really pushing the limits on what's physically possible, and what you can do with lightweight materials and really creative design," Reichert told the Canadian Press. "Winning this competition really is a catalyst to keep doing the things we love. Our goal is to take on projects that really inspire people to follow big dreams."

The AeroVelo team started work on Atlas in January 2012 and flight testing began in August. They refined the design over the following months and, despite two big crashes that destroyed much of their work, Reichert piloted the machine to make the record-breaking flight on 13 June (if you're reading on a mobile device click here to see the flight).

At the presentation of the prize on Thursday, AHS executive director, Mike Hirschberg, said that many in the world's vertical flight community had thought the Sikorsky challenge was impossible. "Several studies 'proved' that it was in fact scientifically impossible," he said. "A human being simply could not generate enough power for long enough to keep a human-powered helicopter in the air for 60 seconds, much less reach 3 metres. And when you add the weight of a control system to keep it hovering over a 10-metre box, it made it even more impossible.

"Well, it took a third of a century to prove those sceptics wrong. It took that long for the state of the art of vertical flight to see significant technological advances in lightweight structures, computer-aided design, aeromechanics, and multidisciplinary design optimisation."

To be crowned winners of the challenge, AeroVelo beat two other teams: engineers from the University of Maryland in College Park, with a helicopter called Gamera II, and California Polytechnic State University in San Luis Obispo, with a craft called Upturn II.

A statement from AHS International said the Sikorsky competition would be followed by "another grand challenge, the details of which are currently being refined".